By Michael P. Norton
As legislators sit on surpluses and federal aid tied to pandemic recovery, taxpayers last month delivered money to state government at an even more accelerated pace than last fiscal year when they contributed to a cash windfall on Beacon Hill.
Department of Revenue officials late Friday afternoon reported that tax collections just two months into fiscal 2022 are up $639 million, or 15.6 percent higher than in the same two-month period of fiscal 2021. August collections of $2.49 billion were up by nearly 27 percent over August 2020.
“August revenue included increases in all major tax types relative to August 2020 collections, including increases in withholding, regular sales, meals tax, and ‘all other tax,'” Revenue Commissioner Geoffrey Snyder said. “The increase in withholding is likely related to improvement in labor market conditions. The increase in regular sales tax reflects continued strength in retail sales, and the increase in meals tax reflects the easing of COVID-19 restrictions. The increase in ‘all other tax’ is primarily attributable to estate tax, a category that tends to fluctuate, and room occupancy tax.”
Income and withholding tax collections, the two largest pots of revenue, were up 25 percent and 20.5 percent, respectively, above August 2020 totals. Snyder’s assessment of improving labor market conditions comes as employers scramble to fill open positions and as 300,000 state residents over the weekend lost federal enhanced unemployment benefits when COVID-19 programs ended on Saturday.
Last month, after revenues beat expectations for fiscal 2021 by roughly $5 billion. Gov. Charlie Baker proposed legislation to spend almost $1.57 billion while substantially bolstering the state’s cash reserves and offsetting some of the long-term unemployment insurance cost increasing facing businesses. The Massachusetts Legislature last held formal sessions in late July. When formal sessions resume, lawmakers face decisions about how to allocate the fiscal 2021 surplus, ways to spend $4.8 billion in federal aid, as well as policy choices in the areas of sports betting, voting law reforms, and redistricting.